Budget 2026 raises Machine Games Duty to 25% on higher-stake machines from April 2027 and leaves online casino tax at 40%. What it means for UK players.
Last updated: 7 November 2026
What the October 2026 Budget changed for gambling, in plain terms
The Chancellor delivered Budget 2026 on 28 October 2026, and it was the second Budget in a row to raise tax on gambling. This time the target was gaming machines rather than online casinos. Machine Games Duty on higher-stake machines rises from 20% to 25% from 1 April 2027, and adult gaming centres in England lose a business rates relief from the same date. Online casino tax, which jumped to 40% in April 2026, was left where it is.
If you play online, nothing in this Budget changes your tax position: gambling duties are paid by operators, not players. But the way those duties are passed on can show up in the games you are offered. This guide sets out exactly what was announced, what the official documents say about the effect on players, and how the full picture of UK gambling tax now looks.
The measures, one by one
1. Machine Games Duty rises to 25% on higher-stake machines
Machine Games Duty, or MGD, is charged on the net takings of gaming machines in bookmakers, arcades, bingo halls, pubs and casinos. It currently has three rates, set by the stake and prize limits of the machine. HM Revenue and Customs published a policy paper on 29 October 2026 explaining the change.
| Machine type | Current definition | Current rate | From 1 April 2027 |
|---|---|---|---|
| Type 1 (lower rate) | Stake up to 20p and prize up to £10 | 5% | Unchanged: 5% |
| Type 2 (standard rate) | Stake up to £5, not Type 1 | 20% | Redefined: stake up to £1 and prize up to £100, still 20% |
| Type 3 (higher rate) | Everything else | 25% | Now includes any machine with stake over £1 or prize over £100, at 25% |
In other words, the 25% rate is not new. What changes is where it kicks in. Today a machine only pays the higher rate if its stake can exceed £5. From April 2027, a £2 stake machine or one paying a £500 top prize moves into the higher band. HMRC estimates around 5,100 operators and about 12,400 premises will be affected, and expects the change to raise £135 million in 2027 to 2028.
The Budget document frames this as paying for a freeze in business rates for retail, hospitality and leisure properties, and says lower-stake machines keep their existing rate to protect pubs and seaside arcades. It describes higher-stake machines as more associated with gambling harm and commonly found in adult gaming centres.
2. Adult gaming centres lose business rates relief
From April 2027, adult gaming centres in England will no longer qualify for the reduced retail, hospitality and leisure business rates multipliers. Vape shops lose the same relief. This is a cost on premises rather than on play, but it lands on the same businesses as the MGD rise.
3. Duty liability moves to machine suppliers from 2028
From 1 April 2028, responsibility for paying MGD on supplier-owned machines under profit-sharing arrangements shifts from the venue to the supplier. The Government has opened a 12-week consultation on how to implement this, closing on 20 January 2027. Players will not notice this one, but it matters for pubs and small venues that host machines they do not own.
4. Gaming duty bands frozen
Land-based casino tax, called gaming duty, is charged in bands of gross gaming yield at rates from 15% to 50%. The Budget freezes those band thresholds from 1 April 2027 to 31 March 2028, which means more of a growing casino’s takings drift into higher bands over time.
What was not changed
Online players were braced for more after last year. The current HMRC rates page shows Remote Gaming Duty at 40% of remote gaming profits for 2026 to 2027, the level it reached on 1 April 2026. Budget 2026 did not touch it. Nor did it change General Betting Duty, which stays at 15% of net stake receipts for fixed odds bets this year. We covered the April 2026 rise and its knock-on effects for online bonuses in our explainer on the 40% remote gaming duty.
The UK tax picture for operators now looks like this:
| Duty | What it covers | Rate for 2026 to 2027 | Announced changes |
|---|---|---|---|
| Remote Gaming Duty | Online casino, slots, bingo | 40% | None in Budget 2026 |
| General Betting Duty | Fixed odds betting | 15% | None in Budget 2026 |
| Machine Games Duty | Gaming machines | 5% / 20% / 25% | 25% band widened from 1 April 2027; supplier liability from 2028 |
| Gaming Duty | Land-based casinos | 15% to 50% in bands | Bands frozen 2027 to 2028 |
| Lottery Duty | Lottery tickets | 12% | None |
Does any of this affect what you pay or win?
Not directly. HMRC’s own impact assessment says the measure “does not directly affect individuals” because MGD is paid by the business. Gambling winnings are not what is being taxed here. If you want the separate question of whether your winnings are taxable, including the crypto wrinkle, read our guide to tax on casino winnings in the UK.
The indirect route is the one to watch. HMRC says the duty rise will affect individuals “if the duty rate increase is passed on to them through changes in returns to players”. In plain language: a venue facing a higher tax bill on a machine can respond by choosing games with a lower return to player percentage, raising stakes, or removing machines. HMRC says the extent of any pass-through is uncertain and depends on business decisions.
How to check whether a machine has got worse
Gaming machines in Britain must display their category and return to player percentage, usually on a label or in the help screen. If you play machines in bookmakers or arcades, note the RTP now and compare it after April 2027. A drop from, say, 94% to 92% doubles the average loss on every pound you stake over the long run, as we explain in our guide to casino RTP. Online, operators must make RTP or house edge available before you play, and volatility matters just as much for how a session feels.
Why machines, and why now
The Budget speech put it bluntly: the Chancellor said he was “raising taxes on gambling” to pay for high street support, while protecting pubs and arcades. HMRC’s policy paper adds that the age group most likely to use machine games is 18 to 24, and that men are slightly more likely to play them.
The tax change arrives alongside a regulatory one. On 30 September 2026 the Gambling Commission announced new standards for category B gaming machines: better access to gambling management tools, on-screen information about how long you have played and how much you have won or lost, and a ban on celebrating “wins” that are smaller than the stake. Most of those rules take effect in June 2027, two months after the duty rise.
Taken together, the direction is consistent. Higher-stake machines are being taxed more heavily and designed more cautiously at the same time. For online players the equivalent shift happened earlier, through the 40% duty, the 10x wagering cap and the deposit limit rules we covered in our guide to the 2026 deposit limit rules.
Key dates
- 28 October 2026: Budget 2026 delivered.
- 29 October 2026: HMRC publishes the MGD policy paper.
- 20 January 2027: Consultation on moving MGD liability to suppliers closes.
- 1 April 2027: 25% MGD rate applies to machines with stakes over £1 or prizes over £100; adult gaming centres in England lose business rates relief; gaming duty bands frozen for a year.
- June 2027: Bulk of the Gambling Commission’s new machine standards take effect.
- 1 April 2028: MGD liability moves to machine suppliers for profit-share arrangements.
This article is general information about announced tax measures, not tax advice. The official sources are the HMRC policy paper and the Budget 2026 documents on gov.uk, linked above.
Frequently asked questions
Did Budget 2026 raise tax on online casinos?
No. Remote Gaming Duty stays at 40%, the rate it reached on 1 April 2026. Budget 2026’s gambling measure was a rise in Machine Games Duty on higher-stake machines from April 2027.
Do I pay tax on gambling winnings after the Budget?
The Budget did not introduce any tax on players. Machine Games Duty is paid by the businesses that operate the machines. See our separate guide on tax and casino winnings for the general position.
Which machines move into the 25% band?
From 1 April 2027, any dutiable machine where the stake can exceed £1 or the prize can exceed £100. Machines with stakes up to 20p and prizes up to £10 stay at 5%, and machines within £1 and £100 stay at 20%.
Will fruit machines pay out less because of the tax?
HMRC says that is possible if operators pass the cost on through lower returns to players, but the extent is uncertain. Machines must display their RTP, so you can check whether a specific machine changes.
When does the Machine Games Duty change start?
The new thresholds apply from 1 April 2027. The shift of liability to machine suppliers follows on 1 April 2028, subject to a consultation that closes on 20 January 2027.
18+. Gamble responsibly. If gambling is affecting you, visit GambleAware or call the National Gambling Helpline on 0808 8020 133.
